Coal's decline forewarned

CHARLESTON, W.Va. -- During last week's gubernatorial debate, Gov. Earl Ray Tomblin tried to offer an encouraging assessment of where West Virginia's coal industry is headed in the wake of this year's string of major layoffs.

"We certainly hope that, as the world economy picks back up, that the demand for coal will go back up, and a lot of these miners will go back to work," Tomblin said.

In the presidential race, Republican candidate Mitt Romney has touted what experts say are greatly optimistic estimates of the life of the nation's coal supply -- if only regulators from the U.S. Environmental Protection Agency would let it be mined and burned. Likewise, President Obama has promoted what he calls "clean coal" as part of an "all of the above" energy plan. Running for re-election, Sen. Joe Manchin, D-W.Va., insists West Virginia coal can help America become "energy independent."

Across West Virginia's southern coal counties, such talk suggests that coal's best days might be just around the corner, if regulators can be made to back off or new technology can capture dangerous emissions.

There's just one problem: Analysts agree that much of the best coal in Southern West Virginia has already been mined. Thinner and lower quality seams are left, meaning production and productivity are dropping. Tough competition from inexpensive natural gas and other coal basins makes matters worse. New environmental restrictions only add to coal's problems, and production is headed down regardless of air or water pollution restrictions.

Overall, production from Central Appalachia -- meaning mostly Southern West Virginia and Eastern Kentucky -- is projected to be cut in half by the end of this decade, according to the latest U.S. Department of Energy forecasts.

Analysts have been warning about the region's ongoing coal decline - and the fact that West Virginia's coal would someday run out -- for years. A century ago, then-Gov. Henry Hatfield warned, "Our great storehouse of natural resources, given to us by nature, is rapidly disappearing."

More recently, a 1995 report by the U.S. Bureau of Mines cautioned that, based on current production levels and known reserves, Boone County "will be able to sustain mining activities for no more than 20 years."

"Coal is a finite resource, and people need to get that into their heads," said University of Texas geologist Tad Patzek, who has studied and written about coal reserves and production projections.

In June, the Energy Department's Energy Information Administration published its latest forecasts for future coal production. They showed Central Appalachian production dropping from 186 million tons in 2010 to less than 75 million tons by 2020. Regional production will bounce back slightly, to about 85 million tons a year by 2030, where it will level off, the agency's forecast said.

"Appalachian coal production declines substantially from current levels, as coal produced from the extensively mined, higher cost reserves of Central Appalachia is supplanted by lower cost coal from other supply regions," the EIA said.

Central Appalachian production isn't going to disappear anytime soon, at least not according to government forecasts. And a projected increase in Northern Appalachian production, including from Northern West Virginia, could offset some of the Central Appalachian decline. But for West Virginia's southern coal counties, the projected decline is significant and could have serious economic impacts.

"There's not any surprise in this," Bill Raney, president of the West Virginia Coal Association, said in an August interview. "You're talking about a declining reserve anyway. We mined the low-hanging fruit a long time ago.

Nearly three years ago, the Morgantown consultant group Downstream Strategies issued a landmark report that tried to summarize earlier EIA projects, put them in context, and draw more public and political attention to the coming coal decline.

"Given the numerous challenges working against any substantial recovery of the region's coal industry, and that production is projected to decline significantly in the coming decade, diversification of Central Appalachian economies is now more critical than ever," authors Rory McIlmoil and Evan Hansen said in their January 2010 report. "State and local leaders should support new economic development across the region, especially in rural areas set to be most impacted by a sharp decline in the region's coal economy."

But even the Downstream Strategies report was nothing new.

When the EPA performed a detailed study of mountaintop-removal mining in the late 1990s and early 2000s, coal production forecasts were among the factors examined.

The EPA, citing projections from the industry firm Hill and Associates, warned of regional production declines as high as 40 percent. Those declines were expected without any additional restrictions on mountaintop removal, and blamed "chiefly on a combination of depletion of reserves and competition with Western coal," according to a March 2002 EPA draft report.

More recently, a June 2010 report by the Appalachian Regional Commission outlined similar findings.

"Coal mining in Appalachia is likely to continue for several decades, although mine productivity is declining as thicker, more accessible coal beds are mined out and succeeded by thinner, and less-accessible coal seams," the ARC report said.

In statewide and national political campaigns this fall, coalfield issues have boiled down to a dispute over Obama administration policies that mine operators argue are destroying their industry.

The number of miners working in Appalachia actually rose during the first three years of Obama's presidency, but a string of layoffs has come since the first of the year, and coal-mining employment in West Virginia dropped by about 1,300 jobs in the second quarter of 2012, according to Labor Department data.

Earlier this year, the West Virginia Center for Budget and Policy looked closely at the models Energy Department officials use to forecast future coal production trends. The center found that agency experts had modeled scenarios that include and exclude new federal limits on power plant emissions of toxic chemicals and possible future limits on greenhouse gases. And those scenarios showed similar reductions in Central Appalachian coal production, whether such EPA rules are put in place or not.

"The reality is that, even without greenhouse gas or mercury regulations, coal production in Central Appalachia is going to dramatically decline," said Sean O'Leary, an analyst with the center. "Repealing environmental regulations won't make the remaining coal seams in West Virginia any thicker or easier to mine, and it won't stop power plants from converting to natural gas."

Over the past year, the center has been promoting a proposal for a small increase in coal and natural gas taxes that would go into a "future fund." Some interest on the fund would be spent on economic development, education and infrastructure improvements. Other earnings would be saved, allowing the fund to grow over time to continue helping with diversification of the state's economy.

Ted Boettner, executive director of the center, said last week that the proposal has been well received by local officials around the state, but has not generally been embraced by statewide political leaders.

"There is a profound disconnect," Boettner said. "County commissioners are concerned about balancing their budgets with declining coal severance taxes and economic development authorities are concerned about diversifying their local economies. And most alarming is that the governor and many legislators are not putting the issue of coal decline and transition at the top of their legislative agenda."

Hansen, who co-authored the Downstream Strategies report, said Friday, "I've not seen a public acknowledgement that Central Appalachian coal production is declining by political leaders, nor have I seen any bold plans to address this decline."